"IT AIN'T OVER TIL IT'S OVER." Yogi Berra. And whether you find those words deeply wise or simply puzzling...The Fed has told us repeatedly that their massive purchasing program of Mortgage Backed Securities is just about over - and this translates to home loan rates rising in the near future.

The amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling, as the program is set to wrap up by March 31st, and are clearly trying to ration out the remaining portion. Last week, the Fed purchased $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment. So about 95% of the total has already been spent and has purchased about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices will worsen.

This is very important because as the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power will wane. And those who can take advantage of currently low home loan rates do not wait, as the clock on these historically low rates is ticking.

Also last week, Fed Chairman Ben Bernanke provided a speech on a number of topics, perhaps the most important of these being switching the Fed's benchmark from the commonly watched and monitored Fed Funds Rate, to a new benchmark of "interest paid on excess reserves". Banks are required to keep money on reserve with the Fed and may, from time to time, have an excess in those reserves, which the Fed can pay interest on.

Since the Fed Funds Rate is only a "target rate", banks can still lend money to other bank overnight at their own negotiated rate. Sometimes near the end of the trading day, banks have been lending their excess reserves out overnight for a rate that differs from the Fed Funds Rate, but is higher than interest on those reserves from The Fed. This undermines the Fed's ability to set a reliable benchmark.

The Fed wants to fix this by using the amount of interest they pay as the new benchmark, since the Fed has total control of this rate, which should be right at or just under the Fed Funds Rate.

There is one major take-away from this discussion - it appears that the Fed is getting their ducks in a row as they prepare to push interest rates higher. And when they do increase rates, the Fed does not want any obstacles that may undermine their plan.

Friday's bond market has opened in positive territory following a weak open in stocks. The stock markets are in selling mode during early trading with the Dow down 110 points and the Nasdaq down 28 points. Weaker than expected earnings reports from a couple of major names is the main reason for the early selling in stocks. The bond market is currently up 9/32, but we will likely still see an increase in this morning's mortgage rates of approximately .250 of a discount point due to weakness late yesterday.

There were two reports released this morning, but neither can be considered highly important to the markets or mortgage rates. September's Industrial Production data was the first, revealing a 0.7% increase in industrial output last month. This was much stronger than forecasts, meaning that production at U.S. factories, mines and utilities exceeded expectations. This can be considered negative news for bonds, but fortunately the bond market has not had much of a reaction to this news.

The last report of the week was October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late this morning. It came in at 69.4, well below forecasts of 73.5. This indicates that consumers were less optimistic about their own financial situations than many had thought. That is good news for the bond market because falling levels of consumer confidence usually means consumers are less likely to make large purchases in the near future, limiting gains in economic activity. However, this report is considered to be only moderately important to the markets and has not had a major influence on this morning's trading or mortgage rates.

Next week brings us a handful of relevant economic reports for the markets to digest. Only one of them is considered very important, meaning it has the potential of significantly affecting mortgage rates. The rest are either of moderate or low importance, which means that they may affect mortgage rates slightly. None of the week's relevant data is being posted Monday, therefore, the stock markets are likely to influence bond trading and mortgage rates. Look for more details on next week's events in Sunday's weekly preview.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Thursday's bond market has opened flat despite early stock gains and stronger than expected unemployment data. Stocks are rallying with the Dow up 80 points and the Nasdaq up 25 points. The bond market is nearly unchanged from yesterday's close, but we will likely see an improvement in this morning's mortgage rates of approximately .125 - .250 of a discount point due to strength late yesterday.

The Labor Department reported this morning that 521,000 new claims for unemployment benefits were filed last week. This was lower than expected and the lowest total in approximately nine months. This is considered bad news for bonds, but fortunately this data is not considered to be highly important and has had little impact on this morning's mortgage rates.

Yesterday's 10-year Note sale actually went very well. Investor demand was strong, indicating there is still an appetite for U.S. debt. The bond market moved higher after the results were posted yes terday afternoon, but the rally fell well short of what would be expected. This could be a result of concerns about today's 30-year Bond sale, or could mean that there is strong resistance at current prices. I am thinking the latter, which is the reason for the conservative approach towards mortgage rates. Theoretically, bonds could still move higher, pushing mortgage rates lower. However, until we are able to break below current levels, I am staying on the conservative side as rates will almost always spike higher faster than they move lower.

There is no monthly or quarterly economic data scheduled for release today. Look for any swings in stock prices to affect bonds, particularly since we are heading into corporate earnings season. Today's 30-year Bond sale probably will not heavily influence mortgage rates this afternoon, but it does have the potential to cause rate changes. I believe its potential negative impact on rates is greater than its likely posi tive impact. This means that a strong sale today may lead to minor improvements to mortgage pricing this afternoon, but a weak sale could lead to a noticeable increase in rates.

Tomorrow morning brings us the only factual economic data of the week, but it is one of the least important reports we get each month. August's Goods and Services Trade Balance will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates. It is expected to show a $32.9 billion trade deficit.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Monday's bond market has opened in positive territory, following the direction of stocks. The stock markets are showing gains of 68 points and 16 points for the Dow and Nasdaq respectively. The bond market is currently up 6/32, but I don't believe we will see much of a change in this morning's mortgage rates.

This week brings us only one monthly economic report for the markets to digest and it is not considered to be of high importance. This means that the week will be left mostly up to the stock markets and other influences since there is a lack of factual data for bonds to trade on. In addition to the one report, we also have two relevant Treasury auctions that can also cause movement in rates if demand for them is particularly strong or weak.

There are no relevant reports or events scheduled for today or tomorrow. The first relevant event of the week is Wednesday's 10-year Treasury Note auction. This sale will give us an important measure of investor interest in longer-term U.S. debt, particularly from international buyers. If there is a strong demand in the sale, we should see the broader bond market rally and mortgage rates move lower. However, a lackluster interest in the sale would likely lead to higher mortgage rates Wednesday afternoon.

Overall, I suspect this is going to be fairly quiet week for the bond market and mortgage rates, especially compared to last week. For the most part, I believe the week will be left to the stock markets and the Fed auctions. The most important day of the week is likely Wednesday due to the 10-year Treasury Note sale, but any day of significant stock volatility may make that particular day the most eventful.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Thursday's bond market has opened in positive territory following early stock weakness and news of an unexpected decline in home sales. The stock markets are showing losses with the Dow down 38 points and the Nasdaq down 25 points. The bond market is currently up 9/32, which will likely improve this morning's mortgage rates by approximately .125 - .250 of a discount point compared to yesterday's morning rates.

The Labor Department announced this morning that 530,000 new claims for unemployment benefits were filed last week. This was much lower than the 550,000 that was expected, meaning the employment sector was stronger than thought last week. That is bad news for bonds and mortgage rates, but since this data tracks only a week's worth of new claims, its impact on rate has been minimal.

The National Association of Realtors gave us today's second piece of data with the release of August's Existing Home Sales report. They said that resales of ex isting homes fell 2.7% last month when analysts were expecting them to report an increase. This was the first decline in five months, raising concerns that the housing sector may not be recovering as quickly as some had hoped. This is good news for bonds and mortgage rates because a broader economic recovery would be difficult with the housing sector still softening.

Today is the 7-year Treasury Note sale. If it is met with a similarly weak demand as yesterday's 5-year Note sale was, we could see mortgage rates move higher during afternoon trading. However, a strong demand from investors could lead to afternoon improvements to mortgage rates. This sale can be considered more important for mortgage rates than yesterday's 5-year auction was, meaning we may see a bigger reaction to its results than we did yesterday.

Tomorrow morning brings us the release of three economic reports, including the week's most important one. That is August's Durable Goods Orders, which will be posted early morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for an increase in orders of 0.5%. A smaller than expected increase could help bond prices and cause mortgage rates to drop tomorrow. However, a larger than expected rise would indicate a stronger than expected manufacturing sector and would likely help push mortgage rates higher.

The second report is the University of Michigan's Index of Consumer Sentiment. This is the revised reading for September. The preliminary reading that was released earlier this month revealed a 70.2 reading. Analysts are expecting to see a small upward revision, meaning consumer confidence was slightly higher than previously thought. A lower than expected reading would be good news for bonds and help improve mortgage rates tomorrow.

The final report of the week is A ugust's New Home Sales. It is expected to show that sales of newly constructed homes rose slightly in August. As with most of this week's data, this report will likely not have a significant impact on mortgage rates unless its readings differ greatly from forecasts.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

WEDNESDAY AFTERNOON UPDATE:


This week's FOMC meeting has adjourned with no change to key short-term interest rates. The post meeting statement didn't give us any surprises. The Fed stated that economic activity has picked up but that the labor market is still a concern and could hamper the economic recovery. They also indicated that inflation remains subdued, which is good news for bonds.

Today's 5-year Treasury Note auction was met with a demand that can be considered on the weak side. This had initially pressured bonds until the FOMC statement was released. The reference to inflationary pressures helped ease the negative tone in the bond market that came as a result of the 1:00 PM posting of the auction data.

The stock markets initially reacted favorably to the FOMC statement with the Dow and Nasdaq both setting new highs of the day immediately after it was released. However, they have since given back those gains and are now well into negative territory, setting new lows of the day. This has helped make bonds more attractive and led to some funds being shifted into the bond market. The end result is that we may see a slight improvement to mortgage rates this afternoon, but many lenders may just wait until tomorrow morning's update to reflect that change.

Weekly unemployment figures and August's Existing Home Sales report are the only semi-relevant economic releases scheduled for tomorrow. The Labor Department will give us last week's unemployment numbers early tomorrow. They are expected to say that 550,000 new claims for benefits were filed last week. But unless we see a wide variance between that figure and the actual number, I don't believe that this report will affect mortgage rates.

The National Association of Realtors will post their Existing Home Sales figures for August late tomorrow morning. This data gives us an indication of housing sector strength by tracking home resales in the U.S. It is expected to show a moderate increase from July's sales, however, this data is not considered to be of high importance to the bond market and likely will not cause a significant change to rates unless it varies greatly from forecasts.

Also tomorrow is the 7-year Treasury Note sale. If it is met with a similar demand as today's sale was, we could see mortgage rates move higher during afternoon trading. This sale gives us a better measurement of investor appetite for longer-term securities such as mortgage related bonds than today's 5-year Note sale did. So, we may see a more profound reaction in the bond and mortgage markets if the sale goes exceptionally well or badly.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Wednesday's bond market opened slightly in negative territory as traders prepare for today's Treasury auction and the FOMC post-meeting statement. The stock markets are showing small losses with the Dow down 19 points and the Nasdaq down 2 points. The bond market is down 2/32, which will likely push this morning's mortgage rates higher by .125 - .250 of a discount point.

I am expecting to see a relative calm morning in trading and mortgage rates but would not be surprised at all to see a revision to mortgage pricing later today. This morning's weakness in bonds is common ahead of important Treasury auctions. If the sales go well, we usually see those losses recovered during afternoon trading.

The Treasury is selling 5-year Notes today and will post results at 1:00 PM ET. This sale does not directly affect mortgage rates, but it does help set the tone for bonds in general. If the sale is met with a strong demand, the broader bond market will l ikely move higher this afternoon. That includes mortgage-related bonds and should lead to downward revisions to mortgage rates later today. But if there was a weak interest in the sale, bonds may tumble after the results are posted, causing upward changes to rates.

Also today is the adjournment of the FOMC meeting that started yesterday. The 2:15 PM ET announcement will very likely say there was no change to key short-term interest rates. This is what the markets are widely expecting, so it should have little impact on trading or mortgage rates. However, the post-meeting statement could very well lead to volatility this afternoon as investors dissect it in an effort to find when the Fed's next move may come. Any indication of a potential rate increase in the near future could be disastrous for mortgage pricing because that would mean the Fed is concerned about inflation rising.

There will be an update to this report shortly after the markets have a n opportunity to react to the FOMC results. That update will also address tomorrow's data.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Tuesday's bond market has opened up slightly despite no relevant economic news on tap today. The stock markets showing minor gains with the Dow up 27 points and the Nasdaq up 6 points. The bond market is currently up 4/32, but we will again likely see little change in this morning's mortgage rates as traders and lenders wait for tomorrow's events to take place before making any sizable changes.

There are no significant events or relevant economic reports scheduled for today. Investors seem to be preparing for tomorrow's events and will likely keep bond prices near current levels until then. This means I am not expecting to see any noticeable changes to mortgage rates this afternoon.

The first of this week's two important Treasury sales will take place tomorrow and the Fed's two-day FOMC meeting will adjourn tomorrow afternoon. The Treasury will sell 5-year Notes tomorrow and 7-year Notes Thursday. If investor demand in these sales is strong, pa rticularly from international buyers, the broader bond market should move higher pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of each sale will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading tomorrow and Thursday.

The FOMC meeting began today and will adjourn at 2:15 PM tomorrow afternoon. There is little possibility of seeing any type of change to key short-term interest rates. However, the post-meeting statement could very well lead to volatility during afternoon trading as investors dissect it in an effort to find when the Fed's next move may come. The wild card is how the markets react to the statement because the lack of a change to monetary policy will not affect the markets. If we see significant weakness in stocks, the bond market may benefit as a safe-haven from the volatility. This could lead to lower mo rtgage rates during afternoon hours and Thursday morning.

We will finally get to see some economic data later this week. Thursday brings us the release of one relevant monthly report and Friday as three scheduled. None of the reports are considered to be extremely important to the markets, but we may see some movement in rates as a result of it, particularly Friday.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Tuesday's bond market has opened in negative territory after this morning's economic news showed a higher level of consumer confidence than was expected. The stock markets are showing gains with the Dow is currently up 70 points the Nasdaq up14 points. The bond market is currently down 7/32, but we will see an improvement in this morning's mortgage rates of approximately .375 of a discount point due to strength late yesterday.

The Conference Board said late this morning that their Consumer Confidence Index for August stood at 54.1. This exceeded forecasts of a 46.6 reading, meaning that consumers were more optimistic about their own financial situations than many had thought. That is considered bad news for bonds and mortgage rates because rising confidence usually means that consumers are more likely to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, weaker levels of spending makes bonds more attrac tive to investors.

The Commerce Department will post July's Durable Goods Orders tomorrow morning, giving us an important measure of manufacturing sector strength. This data tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. A much weaker reading than the expected 3.2% rise that is expected would indicate that the manufacturing sector is not as strong as thought. This would be good news for bonds and should lead to lower mortgage rates.

Also scheduled for release tomorrow morning is July's New Home Sales data. This report is the least important release of the week. It will give us an indication of housing sector strength and mortgage credit demand, but only tracks approximately 15% of all home sales. It usually doesn't have a major impact on bond prices or mortgage rates unless it varies greatly from forecasts.

Also worth noting is tomorrow's 5-year Treasury Note auction. Results of the sale will be posted at 1:00 PM ET tomorrow. If it was met with a good demand from investors, we could see bond prices rise and mortgage rates drop during afternoon trading. However, a lackluster interest in the sale could lead to bond selling and upward revisions to mortgage rates.

Tuesday's bond market has opened flat following a relatively calm opening for stocks and a lack of any significant surprises in this morning's testimony by Fed Chairman Bernanke. The stock markets are showing somewhat minor losses at the moment with the Dow down 27 points and the Nasdaq down 29 points. The bond market is currently nearly unchanged from yesterday's close, but we should still see an improvement in this morning's mortgage rates of a approximately .125 of a discount point due to strength late yesterday.

There was no important economic news scheduled for release today. But Chairman Bernanke is giving his speech before a Joint Economic Committee. His headline comment was that the economy will likely begin to expand later this year, effectively ending the recession. However, he also stated that activity and a broader expansion will be slow and that unemployment may rise further. Overall, it can be considered a cautiously optimistic outlook, whic h doesn't differ greatly from many analysts' predictions.

There is no relevant economic news scheduled for release tomorrow. The Treasury will sell 10-year Notes tomorrow and post results of the sales at 1:30 PM ET. If it was met with a strong demand, we should see bond prices rise during afternoon trading. If the reaction is strong in the market, it could lead to afternoon improvements to mortgage rates. The flip side of that though, is a weak interest from buyers that could lead to bond selling and higher mortgage rates late tomorrow.

The Labor Department will release its 1st Quarter Productivity and Costs data early Thursday morning and April's Employment figures Friday morning. Thursday's report is fairly important, but Friday's data is one of the most important reports we see each month.